UPDATE: Murphy USA Lays Claim as 'Low-Cost Fuel Market Leader'

Spinoff of retail assets allows separate companies to focus on specific business plans

Steve Holtz, Editor in Chief, CSP Daily News

EL DORADO, Ark. -- Convenience store retailer Murphy USA will pursue a business plan and growth strategy as the "low-cost fuel market leader" after it is spun off from parent company Murphy Oil Corp. over the next nine months or so, according to Murphy Oil president and CEO Steven Cosse.

Murphy Oil announced its intent to spin off its downstream assets earlier today, as reported in a Raymond James/CSP Daily News Flash.

The spinoff follows previous efforts by Murphy Oil to reposition itself by selling its U.S. refining assets and U.K. downstream business, which consists of a retail network and a refinery.

"We completed a sale of the U.S. refineries last year and continue to pursue a sale of the U.K. downstream business," Cosse said. "In addition, we're announcing our board's decision to proceed with the tax-free spin of our U.S. downstream business, subject to normal conditions … and regulatory approvals. We expect the spin process will be concluded in 2013."

The new company will include all of Murphy USA's 1,152 retail outlets, two ethanol plants and seven product distribution terminals.

"We believe that creating two publicly traded companies will offer a number of opportunities to enhance shareholder value," Cosse said, enumerating the opportunities:

  • First, each business will focus on its strategic priorities and financial targets with targets that best fit its own markets and opportunities.
  • Secondly, each separate management team will be able to focus on its specific business plan.
  • Third, each business will be able to allocate resources and deploy capital consistent with its priorities.
  • And lastly, investors will be able to value the two businesses based on their individual financial characteristics.

"As a result of the board's decision to spin," Cosse said, "Murphy USA will pursue a business plan and growth strategy as the low-cost fuel market leader."

"Separating these two businesses will allow each to unlock its own potential for growth," said Claiborne Deming, chairman of the board of Murphy Oil. "We have built two strong but distinct businesses. Murphy will be a pure-play exploration and production company with strong returns and attractive investment opportunities, while Murphy USA will be a leading retailer with over 1,100 retail gasoline outlets. Given its existing positioning in the market, I am confident that Murphy USA will continue to grow the business and drive shareholder value."

Murphy Oil has also authorized a special dividend of $2.50 per share for a total dividend of approximately $500 million and a share buyback program of up to $1 billion of the company's shares of common stock.

El Dorado, Ark.-based Murphy Oil, meanwhile, will become an independent exploration and production company with principal activities focused in the United States, Canada and Malaysia.

(See Related Content below for previous CSP Daily News coverage.)

Steve Holtz, CSP/Winsight By Steve Holtz, Editor in Chief, CSP Daily News
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